home . about the EPC . press centre . fact sheets . issues . members' area . links

Issues

Pluralism and media concentration in the internal market - Questionnaire No. III (April 1995)

EPC Submission concerning a possible initiative on media ownership

Introductory remarks

The Members of the European Publishers Council would like to thank the Commission for the open and detailed nature of their consultation previously and at this stage.

We note that the earlier two questionnaires dealt with the need for action and that this current round concentrates on the content of a possible initiative from the Commission.

From our discussions with industry colleagues and the Commission, it is our understanding that there has been no clear industry consensus reached on the need for action at the Community level; industry consensus only exists on the desire for a change to laws that restrict investment across all sectors of the information industry. As far as the members of the EPC are concerned, we believe that publishers ought to have equality of access with our competitors to ownership of all forms of media, including television.

Since the earlier consultations, there is still no consensus amongst members of the EPC as to the need for Community action to achieve this change. This is because of the uncertainty about the eventual content of a Community instrument and thus we reserve our position in the event of a proposal for Community legislation as our final views would rest on the actual content of any proposed legislation.

The EPC would like to re-iterate the point that the industry has changed, and will continue to change beyond all recognition. We are no longer only talking about the supply of printed newspapers and magazines or the broadcasting of television programmes but the distribution of a digital stream of news, information and entertainment. It is no longer possible, we believe, to deal with this stream by traditional methods of restrictive legislation which has always divided the media into clearly defined and separate categories. We now see a continual stream that cannot be damned or diverted into separate channels. It will flow inexorably to meet consumer demand whatever artificial devices the regulators try to build to divert it.

Summary of the EPC position

The consensus view of EPC members as to what the Community should limit itself to, in the event of Community legislation, can be summarized as follows:

Only one aspect of the current national regulations could usefully be harmonized; that is national rules on television, radio and cable ownership, simply in order to remove the severe restrictions on newspaper publishers on investing in television, radio and cable. This could, we believe, be achieved through a Community Regulation requiring Member States to dismantle such discriminatory restrictions.

The heart of the matter for publishers of newspapers and magazines is how we supply our consumers with the products they want. In order to create new information services and thereby new jobs, we need guaranteed access to all forms of distribution. We need unassailable intellectual property rights giving us full control over the exploitation of our copyright material and to protect against unauthorized use of our information. Justification for this position is developed further in the rest of this paper.

If an attempt at harmonization was made, we would recommend the use of a Regulation instead of a Directive in order to avoid ambiguity and subsequent distortion of competition through the application of different rules at the national level.

Meanwhile, we have studied very carefully the questionnaire, together with the accompanying research documents. As a Europe-wide organization however, we feel that it is not possible to answer the questionnaire itself in detail as many of the questions require answers from a purely national perspective. Some of our members however will be answering on an individual basis. As the EPC, we have prepared a synthesis of the views of our members on the key points raised in your questionnaire and of our views about the developing structure of our industry in so far as this relates to the question of media ownership patterns.

We would inform you that, as a follow up to the pilot research project entitled: “Media Regulation in the United Kingdom: The Facts, The History, The Anomalies”, we have produced similar reports for France, Germany, Spain, Italy and Belgium. We will be forwarding copies to you shortly and would ask that you consider these reports as part of our contribution to this current round of consultation. We would also like you to consider the EPC “Publishers’ Declaration”, prepared on the occasion of the G7 Conference, February 1995, as part of our submission.

Towards an integrated information industry

Publishers of newspapers and magazines want to play a key role in the new integrated information industry. The success of the information industry in Europe is vital to the future viability of publishers as we are leaders in the “information business” and are major providers of the “content” of Europe’s information highways. Publishers are key to the EU’s growth and competitiveness as the information industry becomes the largest single economic sector in Europe by the end of the century. The EPC seeks a coherent approach to legislation for our information industry. It is essential that publishers should not be prevented by outdated or discriminatory legislation from optimizing their future prosperity and viability.

We ask the Commission to consider the position of publishers within the general context of the integrated information industry and not simply within the context of media concentration. This is vitally important for a number of reasons:

1. There is complete freedom of establishment at national level with regard to publishing enterprises, whether for newspapers, magazines, books or new forms of publications on-line or off-line such as CD-ROM and CD-I.
2. In the majority of EU Member States, the restrictions on publishers, and the subsequent distortions of the market, relate to their participation in other forms of media, notably television. This dates back to times of channel scarcity when regulators needed to ensure plurality of ownership of media sources by restricting access to ownership. It is no longer tenable to prevent publishers from investing across all sectors of the information industry. In France and Italy, publishers are additionally subject to a monomedia threshold. This acts as a further discriminatory restriction on some of Europe’s publishers, creating a distortion in their ability to grow and compete, as well as a significant obstacle to attracting investments from other Member States
3. The current technology demands that such regulation be redrawn. The industry faces unprecedented competition as new forms of delivery for information services flourish. The end of channel scarcity, together with these new forms of news, information and entertainment will lead to an era of true pluralism of media sources and wide diversity of choice. The heart of the matter, therefore, is not the need to safeguard pluralism, as this will be guaranteed by technological advances; rather it is the need to safeguard access to the market. Nevertheless, access requires that no existing dominant position is abused in a way which would limit unreasonably the economic opportunities afforded to new entrants.
4. The sources of the problem facing publishers today are twofold: national restrictions preventing publishers from participating in television ownership; and the attendant problem of complete lack of restriction on our main competitors for new services. We should have the same freedom as our new competitors. Publishers will be competing with a whole host of information providers for the consumer’s attention: telecommunications companies, computer companies, software providers and cable operators as well as radio and all forms of television broadcaster.
5. Because our future lies in the distribution of digitised information, through a variety of distribution channels, the question of copyright is equally important to that of ownership. We need unassailable intellectual property rights to give us full control over the creation and exploitation of our copyright material in order to build our store of information and to distribute it how and when our customers wish.

We suggest that regulators and politicians, both national and international, are unclear about the dynamics of the publishing industry today. They focus mainly on the industry as conveyors of opinion and very seldom as conveyors of information and entertainment. This has been reflected in national rules to prevent media concentration which erroneously link share of opinion with share of ownership of media companies. They have all too often neglected the industry’s role as a major economic force and provider of employment, seeing it only as a frequently critical voice.

Publishers of newspapers and magazines are major providers of news, information and entertainment and as such are looking for a fresh approach to the part we play in the information industry.

The role of the consumer

The consumer wants our information to be delivered in the most convenient format. This is his choice as well as his right, and must continue to be so. If choice is distorted by regulation, this leads to restriction on consumer choice of product, consumer rights in terms of access to information and on freedom of speech.

The publishing industry must be allowed to organize itself to satisfy consumer choice. It must be able to use whatever delivery mechanism is acceptable to the consumer and it must adapt itself so that it can provide it. The original information may be required via print, TV, radio, telephone, fax, on-line, on tape, CD-ROM or new formats yet to be invented. The publishing industry must be ready to switch to whatever delivery medium is needed to satisfy consumer demand.

To do this, the publishing industry needs to treat the process from origination to delivery as continuous, whatever the form of the final product. The industry must be willing to adapt its distribution techniques as the consumer requires. It must, therefore, be able to access these techniques through ownership or other means; it must have the right to manage them and design them if this is needed in order to meet consumers’ needs.

The benefits of the new integrated information industry

Thus the provision of information should be seen as an integrated process: seamless from its origin to its destination - the consumer - whatever the delivery mechanism he chooses. The benefits will be:

• Multiplication of choice: the industry will constantly seek and offer new ways of reaching the consumer; as it responds to technological advances, and consumer responses;
• Technological development: new technologies will be used and stimulated by this search for improvement;
• Employment: the industry is capable of startling growth as the demand for new formats explodes - and the result will be vigorous job creation;
• Competitiveness: the industry’s competitive edge will be continuously honed by its exploration and development of new products and services.

Issues raised in the questionnaire

Treatment of new services

The questionnaire at section B asks about regulation of new services. We believe it would be a mistake to transfer this old-style regulation of content, based on concepts of pluralism, to new publishing formats -on-line via terminals and off-line via CD-ROM, for example. The result would be that very complex regulations would be framed about who could own what. The who being existing publishers (in both print and electronic) and the what being both new, and old publishing formats (newspapers, magazines, TV). This would be bad for the consumer, whose choices will be distorted; and bad for the industry, whose economic judgements will be constrained and made less efficient by unnecessary regulation. Recent advances in technology already tell us that it is impossible today to say what form of publication the consumer will require in the year 2000, let alone 2010. It is, therefore, highly probably that new forms of publishing will continually fall through the regulation gap and escape altogether, thus penalizing earlier formats.

Audience criteria and identification of media controller

The questionnaire at section F asks about audience criteria and identification of media controllers as a combined test of market dominance to replace current ownership regulations which are based on pluralism criteria.

We have no objection in principle to audience criteria as this is appears to be fairer than strict ownership criteria and would have the advantage of being technology-neutral. It would have the added advantage of being able to embrace all media players; including public service broadcasters. This would be essential in the new competitive era where public service broadcasters compete head-on with commercial operators for a “share of voice”.

The EPC members felt that it could be useful if there were an attempt to harmonize broadcasting regimes but would only really be accurate in terms of terrestrial broadcasting; or when connected to a licensing procedure. We noted the following possible problems:

i) Many of the statistics are collected and sold commercially for a variety of purposes. There is a possibility of manipulation of the statistics according to their use; e.g. if used for selling advertising space, operators will want to show large audiences; if not, audience share can be downplayed;

ii) Most EPC members have said that they doubt that it will be possible to aggregate the component parts of the audience (print, TV, radio, etc) as these statistics are based on different criteria, e.g. readership, circulation, actual audience, potential audience etc. depending on the sector and the country. The accuracy of these statistics in any case vary widely and such disparity could cause further distortion. On the other hand, in the UK, a group of four newspaper publishers (known as the British Media Industry Group) is suggesting that it is possible to establish the quantum, in percentage terms, of audience share attained by a media provider in each sector for the British market.

iii) Accordingly, audience share criteria may work separately in national markets but could not on a European level, unless the whole system was harmonized and subject to harmonized verification criteria. However, such a harmonization could lead to an American-type ratings system which has led to a more homogenized programming content than exists in Europe and an incentive for there to be advertising pressure on programme content.

Monomedia

If the Community proposed legislation on any aspect of media ownership we would ask that, in the interests of removing disparities at Member State level, such a regulation should include a specific requirement that all current national limits on press ownership should be removed, and that subsequent regulation of the national, monomedia press market should be dealt with by competition policy at the national level as is the case in most EU countries.

Regulating the digital age

Audience criteria will be difficult to relate to the digital age. The whole licensing system for digital broadcasting is likely to change once there is an explosion in the number of channels.
It may be that in a few years time the only criteria for issuing licenses will be general content provisions in terms of consumer protection.

If broadcasting (terrestrial, cable and satellite) were to move away from traditional licensing regimes, because there was no longer a need to establish limits of ownership to ensure pluralism, the sector would be best regulated by competition policy like the press at the national level. As in the print sector, there would be no restrictions on freedom of establishment and intervention would only be necessary in cases of mergers and acquisitions and in cases of abuse of dominant positions.

Regulation should be relevant, and proportionate.

It should be relevant by addressing real issues. To summarize: It is no longer relevant to legislate media ownership in terms of share of opinion. Technology renders this outdated; a new pluralism emerges with the fierce competition for the vast multiplicity of services. Information providers, like publishers, must be able to deliver these services to whoever and in whatever format and by whatever delivery means is efficient; both in terms of economics and consumer demand.

As pluralism will be guaranteed by the multiplicity of new services on offer to the consumer, the basis for media legislation should be up-dated; any new regulation should address the following:

a) Freedom to invest across all sectors of the industry on a non-discriminatory basis: Therefore, rules prohibiting publishers from investing in the broadcast media need to be changed by harmonization of national broadcasting and licensing rules in order to remove barriers to cross-investment as this is the source of the current regulatory restrictions on cross-ownership at the national level;

b) Abuse of a dominant position: There should be no limits to ownership of any part of the market. The only cause for action would be in cases of abuse of a dominant position. Any new media regulation must maintain commercial competition at the national and European levels; it need not differ in most respects from current national and European competition policy principles and law.

c) Access to the market: No player, whether content provider, service provider or distributor must be allowed to prevent reasonable access to any sector of the market by any player. Any rules that might replace media ownership rules must address the question of access; this too is a competition policy issue.

The question of access

Any new information industry related legislation must deal with this question of access to the distribution networks to ensure a plurality of servers and plurality of information. This is a question of competition policy.

Imagine a situation where a publisher of newspapers or magazines moves to on-line distribution. He can go straight to an “on-line service provider”, who will be offering a slate of services to consumers, and provide his “content” to the service provider who will take a percentage of the profits and dictate terms and conditions. The publisher thus loses direct contact with his consumers and possibly also loses total editorial control of his products. These “service providers” will be the players with the dominant positions in the market. They will decide which content providers’ products they take. They may dictate unacceptable terms in relation to editorial content.

The alternative for publishers is to set up their own servers on the networks, with their own conditional access terms. To do this successfully, a publisher must first ensure access to a distribution network, probably owned by a telecommunications or cable company. Secondly he has to create the access system and customer services management systems necessary to market his products directly to the consumer. To maintain control over their own products and maintain direct links with their customers this latter scenario will be preferable for most publishers. On-line newspapers and magazines, bulletin boards, etc are totally new information services. This will be easier in countries where sales are currently based on subscriptions rather than individual sales from retailers, news-stands and kiosks.

Finally, we would like to disagree fundamentally with the scenario described on page 6 in the summary report from the European Institute for the Media on the future structure of the industry. The report suggests that the basic concept of a media enterprise will disappear and that raw information will be distributed direct to consumers from databases without passing through a phase of analysis or arrangement in time and space. There is no doubt that certain forms of new services, for example video-on-demand, do not require programme editors in the traditional sense. It is likely also, that a number of personalized services will find a market. But to suggest that instantaneous means of communication will destroy the role of the editorial decision-making process integral to the publishing of “newspapers and magazines” (in print or electronically) is a complete nonsense. Traditional publishers will adapt with the technological advances in order to serve their consumers. The traditional skills of publishers, in terms of creativity, analysis and presentation of complex information will transcend any changes in technology. Publishers, journalists and editors of newspapers and magazines want and expect to be major players in the digital age.

European Publishers Council, 5 May 1995